Guernsey: Dealing With HMRC Investigations Into Offshore Accounts

This memorandum has been prepared for the assistance of our
clients in connection with information notices issued by HM Revenue
& Customs ("HMRC"). It is intended
to provide only a summary and it is not intended to be
comprehensive in scope. It is strongly recommended that you seek
specific legal advice on such matters and we would be pleased to
assist in this respect. A series of briefings on other specific
aspects of Guernsey and Jersey law has been produced by Ogier and
is available on our website
www.ogier.com.

The memorandum has been prepared on the basis of the law and
practice in Guernsey and Jersey as at 15 October 2009. Whilst it
contains a summary of some of the provisions of the HMRC notices it
does not purport to offer any English law advice.

HMRC Notices

On 12 August 2009 HMRC was authorised, pursuant to the Finance
Act 2008, to issue information notices (each a
"Notice") to a large number of UK
financial institutions requiring delivery of certain information
and documents to HMRC.

The Notice requires a recipient to produce certain information
and documents, which are within its power or possession, relating
to account holders who have an address within the United Kingdom
and who hold a non- United Kingdom account. A non-United Kingdom
account is an account (which term is defined to extend to accounts
of any description however identified or marketed) where the money
or assets relevant to the account are held outside of England,
Wales, Scotland and Northern Ireland.

The Notice sets out certain restrictions as to its scope.

Information held by offshore subsidiaries or branches

To the extent that a financial institution that receives a
Notice in the United Kingdom has a subsidiary or maintains a branch
in the Channel Islands, consideration should be given as to how the
institution responds in respect of customer information that is
available to the local subsidiary or branch. Primarily the
recipient of the notice and the Channel Islands subsidiary or
branch will need to ensure that there is no breach of the duty of
confidentiality owed to customers and that there is compliance with
data protection legislation. How an institution responds to a
Notice will depend on the particular factual position applying to
that institution. Some points to consider will include:

The legal structure which underpins the nature of the Channel
Island business - including whether it is structured as a
subsidiary or branch;

The local rules as to confidentiality, how these apply in each
case and how they are affected by any contractual arrangements made
between the Channel Island entity and its customers;

The extent to which the onshore financial institution has
documents or information relating to customers of the subsidiary or
branch available to it without the need to access the written
records or computer network (and servers) which support the
offshore business;

What arrangements need to be made to secure compliance with the
Data Protection (Bailiwick of Guernsey) Law, 2001 and the Data
Protection (Jersey) Law, 2005 when dealing with Channel Island
customer information;

Whether, if an onshore institution already has de
facto access to subsidiary or branch customer information,
such information was delivered in breach of any duty of
confidentiality and, if so, what might be done about that; and

How any information which is available should best be
collated.

The above series of consideration points it is not exhaustive.
In essence each situation should be considered on its facts - a
point HMRC themselves effectively impliedly acknowledge.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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